Property mania in Pakistan..

Society Business and Career
1

If you havent invested in property in big cities in Pakistan for last 3 yrs u have missed the boat.. my sister’s decision to buy a house in States and not in Lahore 2 yrs back is good example of that..

Taking case of Lahore where I live now after coming back from States..Prices have sky-rocketed in past few yrs.. when i came here people told me its an inflated price and bubble will burst soon.. but the bubble have grown manifold.. prices in Lahore where I live are comparable to USA now.. 1 kanal house in areas like Defense, Gulberg, Model Town ., Tech society, Garden Town etc. are 1 kanal (US $ 200,000 - 250,000), 2 kanals (US $300,00-500,000), 4 kanals (500,000 - 1 million).. these prices were less than a quarter from what are now 2-3 yrs back..

One of my friend has a 4.25 kanal house in Lahore in good location.. he was offered (3.5 crores - 0.6 US $ million) in Januaury 2004, (6.5 crores-1.1 million US $) and (10 crores- $1.7 million US).. there are thousands of houses worth more than million US dollars in Lahore and the number is increasing every day.. say my friend sells his house and buys 1.7 million US dollars and market crashes he still would have 1.7 million US dollars !!!

There is a mushroom of new societies 20-30 km from city and prices soaring every day.. prices in Islamabad are very high in comparison to Lahore.. my sister should had bought house in Lahore that she could sell now and but 5 in USA..

People are buying and selling like hell these days..

2

Re: Property mania in Pakistan..

what's the reason?

3

Re: Property mania in Pakistan..

Degas bhai U r so right :k:

IF I had the money I really would buy some property :smack:

lekin afos…FIL-HAAL
irem is KUN-GAAL

:smiley:

4

Re: Property mania in Pakistan..

Its not a question of whether or not the bubble will burst. The bubble has to burst. You have to realize that if the bubble does not burst, the country will go back to pre-musharraf times where everyone is running abroad. This is a natural course of economy. Same is the case with the stock market right now.

The only way one makes money is if one sells now. But thats where the trick is. Noone wants to sell now. Everyone is waiting for the market to go even higher, because like you said, everyone is buying these days, buying into housing projects that will take years to develop. And the moment people start selling their holdings, it will turn into a buyers market. Thats where the downturn lies. Noone knows where that downturn point is, but its there somewhere. There has to be a ceiling to it.

Also add to that the fact that most of the people doing the buying these days are doing so via financing. Those with salaries below 20,000 are getting mortgages for houses that require them to pay 50,000 a month. You may be aware of the fact that a large number of people have defaulted on their loans, and the HBFC has been pleading with consumers via tv and print ads not to get financing if they dont have the means to pay the loan back.

5

Re: Property mania in Pakistan..

now thats surprising…would not the bank do a verification and eligibility check before they issue out a mortgage? For eg..if you monthly income is <20000 , you will get loan of upto a certain limit?

6

Re: Property mania in Pakistan..

i am a real estate expert.

i can tell you know, real estate buble will not burst any time soon. it is growing at a rapid pace currently,

best places to invest in lahore is bahria town sector c, prices for 1 kanal there were 25 lacks in december now it has reached 45 lacks allready.

also silcon valley was lauched in isloo, that is a very good place to invest, gwadar prices are also rising daily, but is risky there.

but i can assure you prices will keep rising till the next 6-8 years.

::: Aaj meri aazaadi khatam ho rahi hai :::
::: Aaj meri aazaadi khatam ho rahi hai :::
7

Re: Property mania in Pakistan..

Bitter, youre right. The banks do verify sources of income. Since govt. pay scales are predetermined, most banks have a pre-set amount designated as loanable to all govt. employees, based on their basic pay scale. As for private employees, most people are able to get loans by either getting a guarantor to co-sign for them, or by showing collateral in the form of property etc. In short, getting a loan is not a huge problem for anyone, what with everything from washing machines to car tires to sofa sets being sold on installments. But even if the monthly installments fall within the salary of a person, thats not a guarantee that the person will be able to make his payments. There are other bills to take care of as well. Taxes in places like DHA are extremely high.

Suhaib, you may be right, but then again, thats where the trick lies. Noone really knows when and how. Also keep in mind the fact that less than 1% of Pakistans population is made up of crorepatis. So basically you have property changing hands between a handful of billionaires, upping the price, coaxing the middle class to join in by any means possible.

8

Re: Property mania in Pakistan..

You mean, you’re a real estate broker? That explains everything. :slight_smile:

9

Re: Property mania in Pakistan..

FYI, this mania has been going on and is growing around the world for atleast 4 years now. In Pakistan, it reached 2 years ago or less.

10

Re: Property mania in Pakistan..

no. i live outside pak, i only invest in plots and files and sell them off after few months.

11

Re: Property mania in Pakistan..

^ I think thats the #1 reason prices are soo high. People Aboard and commercial investing.

Suhaib - do you invest in Pak land personally or for other people too?

Ahsan Khan
12

Re: Property mania in Pakistan..

btw, bubble will burst. It will happen as soon as US will think they dont' need us in the war :)

13

Re: Property mania in Pakistan..

i just buy files/plots and sell them off after.

and no the bubble will not burst any time soon. Real estate will keep booming because it is linked with the economy and till the economy is booming real estate will boom and the economy is booming and booming every year, another reason is there is a huge house shortage in pakistan and untill lots of more houses arnt built there is always going to be a big demand for them and prices will keep increasing.

14

Re: Property mania in Pakistan..

There is a large pool of unemployed people in the country. The unemployment is a serious problem. A country like the US can provide employment to only about two million of them. No country in the world is in a position to provide employment to all our people. Only the Real Estate and Construction Industry can do that. Every year Pakistan needs 700,000 houses but only 300,000 houses are built. This means that every year there is an additional shortage of 400,000 houses in the country.

survey suggests that as many as 60 workers are employed in the construction of a house. Accordingly, if the government undertakes housing projects for 400,000 houses it can create five million jobs.

15

Re: Property mania in Pakistan..

to cut n paste what I had said in another thread..

lets look at it logically..and think of it from a supply and demand perspective as well as returns basis.

how many people will by how much property and what will they do with it, if u cant resell it at higher price then is it a good investment?

with fewer buyers in the market to be able to afford it, the supply will be higher than the "qualified" demand..i.e. not just ppl who want it, but ppl who want ti and are willing to pay what you want for that property.

if prices escalate that property is out of reach of most people, then what do you do with it, if you cant sell it at high prices..what price do you sell at.

rent it? how much will you get on rental to be able to to make it worth your while to have your capital tied up in a property.

speculative real estate investments are causing concerns in real estate circles in US, one would think that the same concepts apply globally.

now lets move beyond the whole supply and demand (rather qualified deemand) for this proerty and look at things in a broader context of economy and political stability.. if either of these 2 are disturbed, the whole house of cards comes crashing down.

if the economy and politial situation stays stable then still the appreciation rate in simply not sustainaable. those buying at the top of the market and holding back to sell it at a higher price will pay dearly. the opportunity is in real estate flipping..buy low sell high and do it very very quickly.

Speculative real estate investing was disasterous in canada when many ppl were investing in homes and locking in pre-construction pricing and then selling those as soon as they were ready for 50% profits when the stampede of ppl from Hong Kong began post UK and China agreement on return of Hong Kong. This happened in a country where this real estate was not out of reach for a critical mass needed to sustain it, but there was just over abundance of property..supply was high, demand did not grow as projected...and boom..prices crashed.

Now land is a different story because it can be segmented into smaller lots and sold to people able to afford a smaller lot, but a house.. thats a whole diff can of worms. It will be only affordable for a small number of people, def not enough to make the growth rate sustainable, or for people to do what has hapened all over London or even Chicago, where old homes in desirable areas were converted into flats to make them affordable for people to actually buy them.

16

Re: Property mania in Pakistan..

While there may be a shortage of housing, the available housing needs to be affordable. you can build 400K million dollar ranches and not solve the housing problem because people simply will be unable to buy the houses.

so what is needed, not just housing, but ‘affordable’ housing. now when you compare the prices to per capita annual income, you can start figuring out what is going on.

the money being poured in from expats into real estate is def not sustainable in the long run.

so where is the money…think small..first of all think land..multipurpose land which can either be used to build condos or to build offices, commecial district, shopping centers etc, or invest in schemes which are building affordable housing, because the demand will be strong there, the retruens may not be phenomenal but it would be a better long term investment approach than the very expensive real estate and looking to that as a guidance.

and y’all better hope that musharraf stays fit and well and safe, they day the current status quo changes…real estate gains go poof

HElp
17

Re: Property mania in Pakistan..

It's already gone poof Fraudz..the stock market crash has hit the stock exchange hard

18

Re: Property mania in Pakistan..

A classic example is the 1920's recession in USA. You;d hope that politicians learned their lessons from then.

19

Re: Property mania in Pakistan..

Zakk, the stock market was over due for correction anyways, but the real estate insanity is still there. I think its collective amnesia in pakistan, the real estate prices jumped up back when nawaz sharif came in power, does anyone remember what happened then?

20

Re: Property mania in Pakistan..

Real estate will down harder than the stock market. A country where average income is may be Rs. 100,000/ anum, how can we have a "boom" on 2-3 crorr homes? Who are these people who are qualifying for loans up to 10 -15 million rupess? Did I miss something? Did I miss the great job and income "boom" that apreared out of no where in Pakistan in last 12 months? Last time I checked I lived in the US for last 20 years, got educated here, have a job paying in 6 fugures but still can not afford to buy a house on cash for $500,000. May be I should find a job in Pakistan? Ponder on these facts before you invest in real estate in Pakistan.